The counterfeit ring allegedly produced millions of dollars worth of counterfeit Microsoft software

The news is flooded with reports of illegal activity online and in the technology world. Groups of pirates sell counterfeit software and make hundreds of thousands of dollars doing so. Many of the alleged software pirates hail from countries outside of the U.S. where the long arm of the law traditionally can’t reach.

Things are changing though and The New York Times reports that a court in southern China has convicted 11 people for violation of international copyright laws. The 11 people were working in a sophisticated software-counterfeiting ring that ran for years manufacturing and distributing pirated Microsoft Software around the world.

The 11 men were sentenced to terms ranging from 18 months to over six years in Chinese prison. Microsoft was very happy for the sentences handed down and said in a statement released Wednesday, "[The prison terms are] the stiffest sentences ever handed down in this type of Chinese copyright infringement case."

The New York Times reports that some legal specialists believe the case to be a landmark of joint anti-piracy efforts between the FBI and Chinese authorities. The counterfeit group that the 11 men operated in is called one of the most sophisticated rings ever seen. Microsoft said, "[The group is] the biggest software counterfeiting organization we have ever seen, by far."

The counterfeit products produced were of such high quality that they were difficult to tell from authentic software. The counterfeit goods were packaged in similar packaging and even had counterfeit Microsoft authenticity certificates. The counterfeit ring produces software like Windows XP and Office 2007 and was broken up in July of 2007 according to The New York Times.

Associate general counsel for Microsoft, David Finn said, "This is absolutely unprecedented. The size and scope of the operation is unlike anything we’ve seen before. We found their products in 36 countries."

The case is cited to illustrate the point that software pirates are becoming increasingly sophisticated in their methods and can export fully packaged, high-quality software products. Microsoft says that even customs officials were fooled by the counterfeit software and the fake Microsoft "Certificates of Authenticity." According to officials, the ring wasn't selling the software inside China and was exporting the goods to foreign markets where profits were higher.

Chinese and FBI officials say that hundreds of millions in software was seized in different international raids. The Shenzhen court where the 11 men were sentenced found that the men had sold less than $200,000 in counterfeit products overseas. With the alleged worth of the counterfeit goods confiscated in raids it's unknown if there are more people working in the counterfeit rings still at large or if other people within the ring simply took a larger portion of the ill-gotten gains.

The software was said to be produced on machinery costing millions of dollars to purchase with packaging and materials in several languages including English, German, Spanish, and others. Warehouses were found connected to the ring that had molding machines, gilding machines, sealing machines, and air compressors stored inside.

Microsoft isn't alone in being a target for software counterfeiters, Symantec software is reportedly widely targeted by pirates as well.

"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007